AEI Economist: Obama Creating Uncertainty

Economist Aparna Mathur says there are lots of positives to take away from Feburary’s jobs report but “tremendous uncertainty” caused by President Barack Obama’s recently announced corporate tax plan could stall economic recovery.

“Businesses need to make long term decisions about taking workers on, putting investments in place… and they aren’t able to do that given all the new regulations the government is putting in place, ” Marthur, a resident scholar at the American Enterprise Institute, tells Newsmax.TV.

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Government figures show employers added 227,000 jobs in the second month of 2012.

“I think it is a good picture. I think we are on the road to recovery. Hopefully this is not just a beginning of the year phenomenon like we had last year. Everybody was ecstatic about the jobs numbers, and then we had the gas price increases and the Japanese disaster and suddenly everything sort of went down.”

Marthur says there are also looming global and domestic factors that could slow down any positive economic momentum the U.S. economy is seeing in 2012.

“One potential problem in the months going forward is the tremendous uncertainty the [Obama] administration could create for businesses to sustain this recovery and sustain this hiring,” she says.

“It’s not clear for businesses what kinds of policies the government is going to put in place for the future. They keep talking about, for example, the corporate tax reform.

“We do see some signs of recovery in the housing market, but not enough to suggest that the housing market is on the road to recovery.

“What we are seeing in the Middle East, the Iranian situation, the increase in gas prices could put pressure on consumer spending,” Martur tells Newsmax.

Marthur also points out that, even though employers added more than 200, 000 jobs in February, unemployment remains extremely high at 8.3 percent and that number may soon start to rise.

“It does seem that more people are reentering the labor market and that could be one reason why the unemployment rate didn’t show any change this month. You could see the unemployment rate going up over the next few months. But, that could be a positive sign,” Marthur added.

When asked what she thought was the most positive thing about the February jobs report, Marthur said: “I think the best thing is that we have shown over 200,000 jobs being created.”

She says another factor that makes her optimistic about the prospect of continued economic growth is the number of “unreported unemployed”. Marthur explains these are people who have quit looking for work, or are working part-time jobs.

“What we have seen in February is a marginal decline in that number. So the unreported unemployed has gone down from 15.1 percent to 14.9 percent,” Marthur says.